I have been bottom feeding for electronics at Tweeter for a long time. One aspect of their stores that has kept me going back is that they have really poor computer systems and inventory management (the systems would have been state of the art 20 years ago).
I just find what I want, wait for the next model then start checking back periodically until the stuff gets marked down below cost then buy it. I got my Pioneer Elite VSX-56Txi for $688 last year (6 months after the 74 took its place), My Sony DHG-HDD500 for $249 (they had never set them up to be demoed, who would buy it if they don't see it working). I do want them to be around for more bottom feeding so I do buy cables and warranties from them (only on the Sony DVR since the thing is about as reliable as a Yugo) they are underwritten so I don't worry too much about the warranties. Buying those things is like buying wine, beer or soda in a restaurant very high markup, most of the profit, but it is relatively small change (I don't buy esoteric stuff, its a total waste).
The middle part of the business is on E-Bay or Audiogon and through installers.
The independent installers/authorized dealers will sell equipment for peanuts (they usually work out of their homes). A friend of mine just bought a bunch of stuff from one and met him at a rest stop on a highway to pick up the goods (sort of like a drug deal).
The big box retailers sell to the naive, their goods are commodities, the manufacturers will eventually figure it out and start releasing their whole lines for internet sales then watch for the shakeout of manufacturers to get even more intense.
I just don't see enough of a market for Tweeter or its ilk to survive. Going up market is not going to work because the good, motivated installers work independently and will sell for a small margin in the hopes of selling services as well, not for a small paycheck and piddling commissions on low margin equipment.